The yield on the U.S. 10-year bond has just fallen below 1.7
percent. UPDATE: the yield has just hit 1.6713
percent, a brand new record low.

In Germany, the 10-year has fallen to a new record of 1.33
percent. UPDATE: And the German 2-year bond
yield has now just fallen to ZERO.

U.K. borrowing costs have hit a record low of 1.73 percent.

In Finland, the yield on the 10-year is 1.624 percent. You
guessed it, that's a record low.

Sweden: The 10-year yields 1.405 percent. Same deal.

In Australia, the 10-year has dropped close to a record low
of 3.061 percent.

Canadian 10-year yields at 1.87 percent are close to a record
low.

Japan's 10-year: 0.85 percent.

Swiss 10-year: 0.59 percent.

Get the point?

All around the world, people are clamoring for the safety of
government debt.

With rare exceptions, falling yields are a bad sign, not
a good sign. They're indicative of people not seeing growth in
real investments and instead preferring fixed government paper.

The one thing that all of these countries (almost) have in common
is their own printing press for currency. The one exception is
Finland (a model of fiscal health). Since Germany controls the
ECB, we're going to argue that they're included in countries that
have their own currency.

Unfortunately, most people look at Spain and Italy and Greece,
and make big sweeping comments about how governments are at the
end of their rope. It's just not the case. In the desperate
search for a safe return on capital, people have never been more
eager to give governments their money.

And furthermore, this unfortunate extrapolation from a few weak
apples is leading to some poor policy mistakes, where governments
that should be spending are doing the exact opposite.